We will use a recently developed co-culture system and an assay for competitive engraftment to identify the best candidatesfor use. The Specific Aims are: (1.) Use standard and unfractionated preparations of human and rat MSCs in the recently developed co-culture system with small airway epithelial cells (SAECs) damaged by heat shock or hyperoxia to generate quantitative assays for (a) differentiation of MSCs; (b) fusion of MSCs with SAECs; and (c) the fate of MSCs that fuse with SAECs. (2.) Use the co-culture assay developed in Specific Aim 1 to determine which of three sub-populations of MSCs that have recently been characterized in our laboratory are the most effective in differentiating into SAECs: (a) small and rapidly self-renewing cells (RS cells); (b) large and slowly replicating mature MSCs (mMSCs); and (c) cells that we have recently isolated and tentatively referred to as pre-RS cells because they are more similar to embryonic cells than RS cells. To define molecular mechanisms that explain any observed differences among cells in the assay, we will carry out microarray assays on the cells before and after addition to the co-cultures. (3.) Use the co-culture assay from Specific Aim 1 to test the same populations of MSCs in analogous co-culture systems in which the target cells are large bronchial epithelial cells, alveolar epithelial cells, or pulmonary vascular endothelial cells. (4.) Determine which of the subpopulations of MSCs from Specific Aim 2 can most efficiently engraft in lung by using a competitive engraftment assay in immunodeficient mice.